Imagine a world where goods seamlessly transition from manufacturers to consumers, a complex dance orchestrated with precision and efficiency. This vision, though seemingly effortless, is brought to life by a pivotal yet often overlooked player – the Freight Broker. Join us as we pull back the curtain and unveil the intricate role these professionals play in the labyrinth of transportation and logistics.
So how much is the freight brokerage industry worth? The 3PL market was valued at $212 billion in 2022. The national average salary for a freight broker in the United States is $62k per year , with an average additional compensation of $28,000 per year for commissions. For a total of $90k. That will give you some idea of what the average broker is earning per year. Remember, this isn’t the average 1st year income for freight broker. But, the average income of all of the freight brokers at any experience level.
Now back to the market for moment, $212 billion is a very large pie. There’s a great line from the movie War Dogs. Jonah Hill says, “Everybody’s fighting over the same pie. But they’re ignoring the crumbs. I live on crumbs. And the crumbs are worth millions.” This is a great analogy for our industry. Most brokers that come into it think you’ll need to have the largest most well known customers to make significant money. And that couldn’t be farther from the truth.
Some of the best customers I’ve seen were the ones no one had heard of. Small to mid size shippers that care about their customers and delivering their products on time; can be some of the best and most profitable companies to work with. I’ve seen customers that ship fish food generate $250k in gross profit in a year. I’ve seen brokers make $400k a year shipping the orange cones and cans along highway construction.
What each of them personally takes home would be specific to their commission structures. For instance, a w2 employee would typically expect to earn 15-25% commission on their weekly gross profit. An agent on the other hand would make anywhere from 40% to over 70% in commissions. The major difference between the two are the salary, the training and support. As a w2 employee you will receive a guaranteed salary and will likely have paid training also. As a freight agent, you have no guaranteed income or training. You’ll also be responsible for your own office, taxes, insurance etc. For more on the difference between a broker and an agent check out our video “Freight Broker Commission Percentage | Everything you need to know!”
So, what is the most amount of money I’ve seen someone make in their first year? Over a million dollars in gross profit. Not take home commission. Their take home was about 25% of that. Now is this typical? Absolutely not. But, it is certainly possible. I’ve told this story a number of times and if you listened to our show you’ve likely heard it. It was a broker that worked at a large big box brokerage with me. This guy was methodical about collecting leads and prospects wherever he was. If he was sitting in traffic and saw a shipper with trucks lined up at their dock, he’d make a note of it. If he was shopping at home depot he would look for the SKU’s or bar codes on the empty shelves. Why? Because they were the most likely shippers to be having supply chain issues.
But, his big break came from a trip to Publix grocery store. For whatever reason, a bag of lettuce caught his eye and he took a picture of the label. The next day we were prospecting together and his first call to that prospect went unexpectedly well. Very well. I can still remember it. The load planner that answered his call was having a terrible week. A lot of their scheduled loads had been given back to her from her other broker. She was in a very difficult position and needed the loads to go out that day. Because if they didn’t there was a large risk of them spoiling and being worth nothing.
He was in the right place at the right time. And she gave him the opportunity to cover the loads for a fair market rate and he jumped right on the opportunity. That 1 shot, turned into over $1 million in gross profit in the first year. It later grew to a $2 or $3 million a year if remember correctly.
Now what are the takeaways and what can we learn from this example? First off, of all of the top performers I’ve had the pleasure of working with, working next to or personally coached, they all had the following in common. They put up a consistent number of prospecting calls every day, and every week. Because the more times you can put yourself in front of a prospect, the more you increase your odds of finding the right prospect at the right time.
None of them ever stopped prospecting no matter how large their books of business grew to, and that became very important over time. Because, no matter how large your book is. Or how great your relationship is with your customer. There is always the risk it will go to zero. Companies are acquired, sold, people get promoted, fired or leave to go elsewhere. And if you’re not constantly adding to your prospects, time is slowly working to take them away.
The other major thing they have in common is being very competitive. Whether it be competition against their previous selves or others in their office. They are all driven to do a little better than they did yesterday. Whatever you can do to create goals for yourself and friendly competition with others will go a long way in helping you stay motivated along your journey. It’s definitely not easy, but it is simple and straightforward. If you’re putting the work in consistently. That is making the calls and the follow ups every day, you’ll find yourself amongst the most successful before you know it.